Section 535 — Removal of difficulties. Successor to s.298 of the 1961 Act.
Section 535 is in Chapter XXIII — Miscellaneous, which runs from section 499 to section 536.
Sub-section (1) lets the Central Government, if any difficulty arises in giving effect to the provisions of the Act, do by general or special order anything not inconsistent with those provisions which appears to it necessary or expedient to remove the difficulty. Sub-section (2) says that, in particular and without prejudice to that generality, such an order may provide for the adaptations or modifications subject to which the Income-tax Act, 1961 shall apply in relation to assessments for the tax year ending on 31 March 2026 or any earlier tax year. Sub-section (3) bars any order under sub-section (1) after the expiration of three years from 1 April 2026. Sub-section (4) requires every order made under the section to be laid before each House of Parliament as soon as may be after it is made.
A new Act replacing an old one throws up transitional problems that cannot all be foreseen, and the largest of them is how the Income-tax Act, 1961 continues to govern assessments for years already closed. The section gives the Central Government a limited power to patch such difficulties by order rather than by amendment, and then fences it three ways: nothing inconsistent with the Act, nothing after three years, and everything laid before Parliament.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Life of the power to remove difficulties | Three years from 1 April 2026 | No order under sub-section (1) may be made after that period expires; orders already made are unaffected | Sub-section (3) |
| Years for which the Income-tax Act, 1961 may be adapted | The tax year ending on 31 March 2026, or any earlier tax year | Adaptations or modifications for assessments relating to those years only | Sub-section (2) |
The power is bounded on all sides. An order can do only what is not inconsistent with the provisions of the Act, so it cannot alter a rule the Act itself lays down; it may be general or special; and it dies three years after 1 April 2026, which gives the transitional patching a fixed end. Sub-section (2) is an illustration of the wider power, not a limit on it — "in particular, and without prejudice to the generality" makes adapting the Income-tax Act, 1961 for the tax year ending 31 March 2026 and earlier years one use of the power rather than its whole scope.
A difficulty arises about how a provision of the Income-tax Act, 1961 is to operate in an assessment for the tax year ending 31 March 2026 that is completed after the 2025 Act has come into force. The Central Government may, within three years from 1 April 2026, make a general order under sub-section (1) read with sub-section (2) prescribing the adaptation subject to which that provision applies, and must lay the order before each House of Parliament. It could not use the same power to change a rule the 2025 Act itself lays down, because the order must be not inconsistent with the Act's provisions.
A taxpayer does not meet this section directly. He meets its output — a removal of difficulties order notified by the Central Government — usually where an assessment for the tax year ending 31 March 2026 or earlier is being made under the Income-tax Act, 1961 as adapted by such an order.
the Central Government may, by general or special order, do anything not inconsistent with such provisions which appears to it to be necessary or expedient for the purpose of removing the difficulty
No order under sub-section (1) shall be made after the expiration of three years from the 1st April, 2026.
See the full 1961 to 2025 concordance.